Week 6 - Relationship Management, Development & Evaluation Flashcards
What is supplier development?
Is the process of working with certain suppliers on an one-to/one basis to improve their performance for the benefit of the buying organisation (CIPS)
What is partnering
It is joint buyer/supplier development activity to improve the integrated performance and capabilities of both the supplier and the buyer
What does supplier development involve and what is the end goal? (2)
• Giving regular feedback of supplier performance as experienced by the buyer’s organisation, together with any customer complaints
• The end goal is to develop the suppliers capabilities to increase value in both products and services
Areas for supplier development (8)
• Cost reduction
• Quality improvement
• Improved lead times or delivery reliability
• Improved product or service functionality or performance (more suited to consumer needs)
• Improved support from the supplier - e.g automated stock replenishment and reduced payment terms
• Improved product training for customer end users
• Improved corporate alignment - through supplier seminars outlining their responsibilities
• Improving environmental performance and sustainability within the supply chain (e.g CSR)
Benefits of effective supplier development (2)
• Provides a strong incentive for suppliers to improve their performance - especially in delivery reliability and lead times
• Areas of improvement are tailored to the specific needs of the buyers organisations which help with gaining a competitive advantage
Ways you manage a supplier (4)
• Assessing their capability to meet your contractual needs
• Measuring their performance during the contracting period
• Working with them to identify challenges whilst looking to improve the working relationship
• Ensuring you have the right levels of contact to ensure that the relationship remains on track for both parties
Benefits of supplier relationship management (9)
• Reduced costs
• Cost information exchange
• Increased efficiency - more complete understanding leading to last waste in resources
• Minimises price volatility
• Consolidation of the supply chain - better understanding of the supply chain encourages streamlining of the supply chain
• Outsourcing certain activities
• Continual improvements of operations
• Technology or innovation exchanges
• Improved or priority service levels
Define supplier appraisal
Assessment of a potential supplier’s capability of controlling quality, delivery, quantity, price and all other factors to be embodied in a contract
Define supplier approval
The placing of an enterprise on an approved list of suppliers following a process of supplier appraisal
Define supplier rating
An index of the actual performance of a supplier
3 reasons why appraising suppliers is important
• Strategic sourcing - the location, evaluation and selection of suppliers capable of meeting the requirements with purchasing and help achieve a competitive advantage
• Supplier management
• The achievement of competitive advantage - by offering greater value compared to rivals
Process of supplier evaluation (7)
• Designing an effective pre-qualification questionnaire
• Designing the evaluation scoring and weightings model
• Creating and briefing an evaluation team
• Analysing and reporting on responses submitted
• Making reference site visits
• Taking up references
• Undertaking due diligence
What should be appraised? (8)
• Finance
• Production capacity
• Production facilities
• Human Resources
• Quality
• Performance
• Environmental and ethical factors
• Information technology
Supplier evaluation criteria/factors (10)
• Quality and process control
• Continuous improvement
• Facility environment
• Customer relationship
• Delivery
• Inventory and warehousing
• Ordering
• Financial conditions
• Certifications
• Price
3 types of appraisal
• Desk appraisal
• Final appraisal
• Third party appraisal
VRIO Framework
